Dollar gains over dong; heads for weekly loss vs. majors

The U.S. dollar saw a slight increase against the Vietnamese dong on Friday morning, with Vietcombank selling the greenback at VND26,285, up 0.1% from Thursday. On the black market, the currency dropped 0.23% to around VND25,810. The State Bank of Vietnam (SBV) reduced its reference rate by 0.04% to VND25,605. Globally, Asian shares rose on Friday as investors embraced a global rally before crucial U.S. jobs data. Bonds found some relief after a top Federal Reserve official cooled rate hike fears, dragging the dollar lower. The dollar drew scant support from higher yields and was fetching 98.96 against its major peers, after skidding 0.6% overnight. It is set for a weekly drop of 0.7%. The dollar's retreat turbocharged a rally in the yen, which has gained 2.6% this week to trade at 155.7 a dollar, putting it within striking distance of the 155.2 level. Attention now shifts back to key data releases ahead of the Federal Open Market Committee (FOMC) meeting on September 15-16, including nonfarm payrolls later and CPI inflation next week. Markets now imply a 75% chance of a September move, while a hike by October is fully priced in, raising the prospect of either a larger increase or back-to-back tightening. 'While we can't rule out another round of price checks, or intervention, it could also be pre-positioning — official or speculative — in expectation of a soft non-farm payrolls tonight and a potentially hawkish BOJ meeting in a fortnight,' said Tony Sycamore, analyst at IG. In Vietnam's single-party system, the central bank carefully manages monetary policy to balance economic stability and growth. The current depreciation of the dong may help maintain export competitiveness but also raises concerns about rising import prices and inflationary pressures. Global monetary policy trends, particularly from the U.S., are significant external factors for Vietnam's economy, especially its export-oriented manufacturing sector. Information source: VnExpress International